52 STAT.] 75TH CONG. , 3D SESS.-CH. 289-MAY 28, 1938 (6) MINISTERS.- The rental value of a dwelling house and appurtenances thereof furnished to a minister of the gospel as part of his compensation; (7) INCOME EXEMPT UNDER TREATY.- Income of any kind, to the extent required by any treaty obligation of the United States; (8) MISCELLANEOUS ITEMS.- The following items, to the extent provided in section 116: Earned income from sources without the United States; Salaries of certain Territorial employees; The income of foreign governments; Income of States, municipalities, and other political subdivisions; Receipts of shipowners' mutual protection and indemnity associations; Dividends from China Trade Act corporations; Compensation of employees of foreign governments. (c) INVENTORIES.-Whenever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of the Sec- retary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income. (d) INVENTORIES IN CERTAIN INDUSTRIES. - (1) PRODUCERS AND PROCESSORS OF CERTAIN NON-FERROUS METALS.-A taxpayer shall be entitled to elect the method of taking inventories provided in paragraph (2) if his principal business is- (A) Smelting non-ferrous ores or concentrates, or refining non-ferrous metals, or both; or (B) Producing brass, copper products, or brass products, or any one or more of them, not further advanced than rods, sheets, tubes, bars, plates, or strips. (2) INVENTORIES OF RAW MATERIALS.-A taxpayer entitled to elect, and who has so elected, shall, in taking his inventory as of the close of any taxable year beginning after December 31, 1938, of raw materials which are- (A) used in a business described in paragraph (1); and (B) not yet included in goods in process or finished goods; and (C) so intermingled that they cannot be identified with specific invoices; treat such raw materials remaining on hand as being: First, those included in the inventory as of the beginning of the taxable year (in the order of acquisition) to the extent thereof, and second, those acquired in the taxable year, in the order of acquisition. (3) TANNERS. - A taxpayer whose principal business is tan- ning hides or skins, or both, shall be entitled to elect (with respect to any taxable year beginning after December 31, 1938) the method provided in paragraph (2) as to the raw materials (including those included in goods in process and in finished goods) in the business of tanning hides, or skins, or both, if so intermingled that they cannot be identified with specific invoices. (4) INVENTORIES AT COST.- In the case of the application of the provisions of paragraph (2) or (3) all inventories of such mate- rials shall be taken at cost, including the inventory as of the close of the preceding taxable year. (5) ELECTION OF METHOD. -The method provided in paragraph (2) or (3) shall not be applied unless the taxpayer, at or before 459 Ministers. Income exempt un- der treaty. Miscellaneous items. Post, p. 498. Inventories, when used to determine in- come. Inventories in cer- tain industries. Producers, etc., of certain non-ferrous metals. Inventories of raw materials. Tanners. Inventories at cost. Election of method.
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